What type of audit approach should the auditor use when testing KYC files as part of an AML examination?

What type of audit approach should the auditor use when testing KYC files as part of an AML examination?
A . Horizontal
B . Full scope
C . Vertical
D . Risk-based

View Answer

Answer: C

Explanation:

Understanding the Vertical Approach:

A vertical audit focuses on reviewing the entire process or function within a single area or department, such as testing KYC files for compliance and effectiveness in a specific customer group or business line.

Application in AML Examinations:

Vertical audits are particularly useful for examining KYC processes as they allow auditors to trace the end-to-end workflow, from customer onboarding to risk assessment and ongoing monitoring.

Alignment with Advanced CAMS-Audit Guidelines:

The vertical approach provides detailed insights into compliance gaps within the KYC function, helping auditors identify root causes and systemic issues, which is emphasized in CAMS-Audit training.